A number of Bitcoin services, wallets, and exchanges have been destroyed by hacking. Is the US government to blame?

One need not look too carefully to notice that Bitcoin is under attack. In addition to governments warning against using this new form of value, if not banning it outright, we see a slew of commentators, bankers, and “financial experts” disparaging the innocent cryptocurrency, heaping scorn upon any who might consider using the same. Then there are the cyber attacks themselves.

This is not to absolve Karpelès of blame and possible charges of theft, it simply suggests that the attack was more than just opportunistic. It was well planned and expertly executed. Was it more than mere theft? It should be noted that before Mt. Gox fell to hackers, the US government tried to shut it down by seizing its assets.

The GBL exchange claimed to be based in Hong Kong later discovered to have been located in China, vanished in November. Whether this was the result of an attack or mere theft is not known.

December saw 21 million Dogecoins (another cryptocurrency) disappear from Dogewallet. Total loss placed at less than $13,000.

These hacked Bitcoin sites were for all intents and purposes murdered. One need only view any decent 40s murder mystery and you will discover what a detective needs to make an arrest for murder: means, motive, and opportunity.

Hardly a week goes by without the publication of another dozen new articles attacking Bitcoin. None have provided further insight into the risks of trading or keeping Bitcoin than has been stated before. Will someone please pass a message to the press? The sky is falling. We get it.

Banks

So far, the US government has done everything possible to discourage the use of Bitcoin short of an outright ban. Individual businesses have been especially targeted for harassment for using it. This is done indirectly using the federally regulated American banking – finance system.

Using the pretext of protecting the public from “money laundering,” “financial terrorism” and other hollow fear inducing buzzwords, legitimate business are being prevented from doing lawful business by this banking cabal. The incidents of financial thuggery on the part of the banks are far from isolated.

Official American opposition to Bitcoin is so strong that its effects are being felt beyond our borders. Toronto-based Bitcoin exchange Vault of Satoshi, has given up entirely on taking dollars in exchange for Bitcoin because of regulatory pressure.

The US government is so protective of the corrupt fractional reserve banking system that one man, Bernard von NotHaus, was arrested and convicted for minting an alternative currency. He was convicted of “counterfeiting,” even though the coins he minted looked nothing like the copper – zinc coins the US government mints. His coins were made of gold and silver. People liked using them instead of Federal Reserve Notes.

NotHaus was branded a “terrorist” by the US government for promoting the use of an alternative currency.

Not to be left behind in the Bitcoin bashing party are the states of California and Virginia.

One reason for the US government’s hostility toward Bitcoin concerns taxation. The IRS hasn’t got a clue. They haven’t got a plan to even seek a clue.

Given the foregoing, proving motive is a cinch. The United States government hates Bitcoin. Does the US government feel justified in stealing BTC as part of their “war on terror?”

“US CYBERCOM plans, coordinates, integrates, synchronizes, and conducts activities to: direct the operations and defense of specified Department of Defense information networks and; prepare to, and when directed, conduct full-spectrum military cyberspace operations in order to enable actions in all domains, ensure US/Allied freedom of action in cyberspace and deny the same to our adversaries.”

An examination of the preceding facts do not prove conclusively that the United States intelligence services are responsible for the most recent spate of attacks upon the Bitcoin network. Those facts can only be tried and proven by a jury. The chances are, no jury will judge this case. The evildoers hold the all the cards in court. This does nothing to change the fact that the US government had not only the motive to murder these Bitcoin businesses, but the means and opportunity which no other suspect can muster.

It may be difficult for some Americans to believe that our government could act so callously as to ruin thousands of innocent people financially, just because they don’t want people to use it. It runs counter to our sense of right and wrong.

It cannot be denied that the US government had not only a motive for stealing millions of dollars worth of Bitcoin from the aforementioned victims, but the means and opportunity. This may not secure a conviction in 2014, but in 1944 it most certainly would have supported an indictment.

Hackers wishing to expose Mark Karpelès as a duplicitous scoundrel hacked his blog on Monday, posting accusations of theft in an expletive laced rant. If the allegations are true, Karpelès may well face criminal charges for withholding assets from a bankruptcy court.

Although the blog returned an error message at 0240 UTC Monday, a view of the Google webcache of the Magical Tux Blog still carried the message. It is presented here in it’s entirety (sans expletives) with links preserved.

First and foremost, this is not Mark Karpeles. [Expletive] that [expletive]-[expletive] mother[expletive.]

It’s time that MTGOX got the bitcoin communities wrath instead of Bitcoin Community getting Goxed. This release would have been sooner, but in spirit of responsible disclosure and making sure all of ducks were in a row, it took a few days longer than would have liked to verify the data.

Above you will finding download link and a mirror used without asking from Mark Karpeles very own blog.magicaltux.net.

Included in this download you will find relevant database dumps, csv exports, specialized tools, and some highlighted summaries compiled from data. Keeping in line with [expletive] Gox alone, no user database dumps have been included.

Repost and share this info before it’s gone. Lots of people, including us, lost money and coins. Upvote this post.

We stole no bitcoins. There were none to steal. If you want to donate, you can keep us full of pizzas and beers by sending coins here, 1859rayqN1X7DYjD1BrAHm4vaQxoUhhzsN .

Forbes is reporting that someone making a post on the BitcoinTalk forum, offered to sell a 20 gigabyte database, supposedly stolen from Mt. Gox., for 100 Bitcoins. These files are said to contain personal information of all Mt. Gox users. Could the individual offering these files to “make up personal loses,” be the same hacker that defaced Karpelès blog and published Mt. Gox’s BTC balances?

BTC prices dropped about 7% across the board Friday, as the Bitcoin network absorbed a major distributed denial-of-service (DDoS) Wednesday. According to the South China Morning Post, the event which caused a number of exchanges to suspend BTC transfers was a “broad-based attack,” according to Andreas Antonopoulos, chief security officer of digital wallet service Blockchain.These most recent cyber-assaults upon the Bitcoin community have added two more victims, one dead, one wounded. Injured was BTC exchange Poloniex. The attack resulted in the exchange losing more than 12% of the Bitcoins previously in their possession.

Listed as dead is Canadian BTC bank Flexcoin, which was decimated by the assault. The company published this statement on it’s website:

“Having this be the demise of our small company, after the endless hours of work we’ve put in, was never our intent. We’ve failed our customers, our business, and ultimatley (sic) the Bitcoin community.

Please direct any and all questions to admin(at)flexcoin(dot)com and we will reply to you as soon as possible.”

There is some fear that US based BTC exchange Kraken might be next as it was announced that the exchange will no longer accept deposits denominated in USD. The company denies this, blaming pressure from the bank with which they do business. The company is seeking another bank to handle their exchange account.

Two major exchanges – Bitstamp and BTC-e – halted withdrawals during the attack. Coinbase was also said to have suspended BTC withdrawals until the attack had been addressed.

Despite the sophistication of the attack and the amount of “brute force” involved, Bitcoin security experts are confident that the technology and the community itself are able to withstand such assaults.

ANNOUNCEMENT REGARDING AN APPLICATION FOR COMMENCEMENT OF A PROCEDURE OF CIVIL REHABILITATION

MtGox Co., Ltd. made today an application for commencement of a procedure of civil rehabilitation (minji saisei) at the Tokyo District Court. This application was accepted on the same day. Further, MtGox Co., Ltd is under several orders issued by the Court : a preservative order prohibiting it from paying its debts, transferring its assets or establishing security over its assets, an order establishing a comprehensive prohibition of forced attachment of its assets by its creditors and a supervisory order ordering supervision by a supervisory committee. In consequence, MtGox hereby informs you as follows. We first express our most sincere regrets and apologies for this situation and for causing so much inconvenience to all our users and other interested parties. We will fully respect the above orders and maintain our assets with all the necessary care.

Financial situation, reasons and timeline leading to this application

(1) As of now, the liabilities of MtGox Co., Ltd exceed its assets and its financial situation is as follows:

Total amount of assets

3,841,866,163

Total amount of current liabilities

6,501,119,371

(2) The increase of current liabilities may be linked to a loss of bitcoins and customer funds. These are now investigated by an expert and all efforts are made to discover the truth. This application was prompted by the following troubles:

At the start of February 2014, illegal access through the abuse of a bug in the bitcoin system resulted in an increase in incomplete bitcoin transfer transactions and we discovered that there was a possibility that bitcoins had been illicitly moved through the abuse of this bug.

As a result of our internal investigation, we found that a large amount of bitcoins had disappeared. Although the complete extent is not yet known, we found that approximately 750,000 bitcoins deposited by users and approximately 100,000 bitcoins belonging to us had disappeared.

We believe that there is a high probability that these bitcoins were stolen as a result of an abuse of this bug and we have asked an expert to look at the possibility of a criminal complaint and undertake proper procedures.

On the same day (24th), we found out large discrepancies between the amount of cash held in financial institutions and the amount deposited from our users. The amounts are still under investigation and may vary but they approximate JPY 2.8 billion.

We are investigating the causes of these problems. Since there are probably a variety of causes including hacking by third parties, we need to investigate a huge amount of transaction reports in order to establish the truth. As of this date, we cannot confirm the exact amount of missing deposit funds and the total amount of bitcoins which disappeared.

Once we discovered that bitcoins had disappeared and the discrepancies between cash funds and deposit balances, we judged that it would be difficult to continue our activities normally and we therefore closed our site at noon on the 25th (Japan time).

(3) Regarding the filing of a complaint or damages report, an expert has been mandated and investigations have started. We will make all efforts to ensure that crimes are punished and damages recovered.

Further we will fully cooperate with inquiries from authorities and investigations related to this matter, in Japan or overseas.In order to increase repayments to our creditors, it is necessary to explore the possibility of having MtGox Co., Ltd. continue its business. This is why the civil rehabilitation procedure has been chosen, rebuilding MtGox Co., Ltd under the supervision of the court in a legally organized procedure while giving proper explanations will not be for the sole benefit of the company but for that of the whole bitcoin community.

All efforts will now be made to restore the business and recover damages to repay debts to creditors. We hope for the understanding and cooperation of all.

Contact informationA call center has been established to respond to all inquiries. The call center is planned to start on March 3, 2014. All inquiries to MtGox Co., Ltd. should be made to the following telephone number:

Telephone number +81 3-4588-3921 Working hours Monday to Friday 10am to 5pm (Japan time)Please refrain from contacting the office of the supervisor/investigator.

You wouldn’t know it if you read the newspaper. The television avoids the subject. You would have to work to find it in any “news” items on the internet. Still it’s true.

Bitcoin lives.

It’s clear many people trust Bitcoin over the skeptics, as it continues to hold it’s own. Nowhere is this more true than among the Chinese people, who are buying Bitcoin at a furious rate. This runs counter to Chinese state propaganda, which suggests that the Chinese people have lost confidence in Bitcoin.

“The failure of Mt. Gox, once the world’s largest bitcoin exchanges, has hurt market confidence in the virtual currency in China and prompted many Chinese investors to question its viability.”

China has been as hostile to Bitcoin as a government can be without banning it outright.

Two months ago, the Chinese government forbade Alibaba’s Taobao website, an eBay type platform, to allow merchants to accept payment in Bitcoin. This includes a ban on all virtual currencies on the website.

BTC China halted trading for a time, when it was announced that it was unable to accept Chinese currency. BTC China is again doing a robust business. The prohibition didn’t seem to affect Hong Kong. In that city, investors can buy Bitcoins over the counter at the new ANXBTC Exchange.

The Chinese government is none too happy about the people’s refusal to be dissuaded from buying bitcoin, and it may have become personal. There is reason to suspect that Chinese hackers retaliated against the central bank. The website for the People’s Bank of China went down after a prolonged denial of service attack.

With all the condemnation Bitcoin has received from professional “financial analysts,” most of whom have a personal and financial stake in its demise, the people are embracing it. These same financial “experts” show by their statements that they don’t really understand what Bitcoin is about – not exactly the kind of people I want advising me.

Regardless of the pronouncements of the naysaying experts, there are still many people who believe that Bitcoin is undervalued. They have money and they are willing to gamble that Bitcoin will grow in value. In China, that enthusiasm is greater than the strong words and fierce countenance of the People’s Republic of China.

Prices on the BTC China exchange are at present trading at about 1.5 – 2% lower than on Bitstamp and Coinbase.

There’s still room on the Bitcoin elevator for the courageous. Going up?

Please refrain from contacting the office of the supervisor/investigator.

There has also been some discussion among Mt. Gox BTC victims as the whether they might be able to simply assume control of the company as a means to recover all or part of their investment. Given the fact that Mt. Gox has already filed for bankruptcy, such a plan has little chance of succeeding.

As the “mainstream media” continues to celebrate the death of Bitcoin, the cryptocurrency stubbornly continues to trade in the $550 – $600 range.